http://www.guardian.co.uk/business/2011/jun/06/us-economy-decline-recovery-challenges
America in 2011 is Rome in 200AD or Britain on the eve of the first world war: an empire at the zenith of its power but with cracks beginning to show.
The experience of both Rome and Britain suggests that it is hard to stop the rot once it has set in, so here are the a few of the warning signs of trouble ahead: military overstretch, a widening gulf between rich and poor, a hollowed-out economy, citizens using debt to live beyond their means, and once-effective policies no longer working. The high levels of violent crime, epidemic of obesity, addiction to pornography and excessive use of energy may be telling us something: the US is in an advanced state of cultural decadence.
Empires decline for many different reasons but certain factors recur. There is an initial reluctance to admit that there is much to fret about, and there is the arrival of a challenger (or several challengers) to the settled international order. In Spain's case, the rival was Britain. In Britain's case, it was America. In America's case, the threat comes from China.
Britain's decline was extremely rapid after 1914. By 1945, the UK was a bit player in the bipolar world dominated by the US and the Soviet Union, and sterling – the heart of the 19th-century gold standard – was rapidly losing its lustre as a reserve currency. There had been concerns, voiced as far back as the 1851 Great Exhibition, that the hungrier, more efficient producers in Germany and the US threatened Britain's industrial hegemony. But no serious policy action was taken. In the second half of the 19th century there was a subtle shift in the economy, from the north of England to the south, from manufacturing to finance, from making things to living off investment income. By 1914, the writing was on the wall.
In two important respects, the US today differs from Britain a century ago. It is much bigger, which means that it benefits from continent-wide economies of scale, and it has a presence in the industries that will be strategically important in the first half of the 21st century. Britain in 1914 was over-reliant on coal and shipbuilding, industries that struggled between the world wars, and had failed to grasp early enough the importance of emerging new technologies.
Even so, there are parallels. There has been a long-term shift of emphasis in the US economy away from manufacturing and towards finance. There is a growing challenge from producers in other parts of the world.
Showing posts with label End Of Empire. Show all posts
Showing posts with label End Of Empire. Show all posts
Wednesday, June 8, 2011
Monday, February 28, 2011
In one of final addresses to Army, Gates describes vision for military's future
I told this to my adversaries a decade ago.
http://www.washingtonpost.com/wp-dyn/content/article/2011/02/25/AR2011022504180.html?hpid=moreheadlines
WEST POINT, N.Y. - Defense Secretary Robert M. Gates, in one of his last addresses to the Army, said Friday that he envisages a future ground force that will be smaller, pack less heavy firepower and will not engage in large-scale counter-insurgency wars like those in Iraq or Afghanistan.
"In my opinion, any future defense secretary who advises the president to again send a big American land army into Asia or into the Middle East or Africa should 'have his head examined,' as General MacArthur so delicately put it," Gates quipped.
(Wally: So much for Rumsfeld- worse than McNamara)
Gates, who is expected to leave his post later this year, predicted a greater role for the Navy and Air Force in the future and warned the Army to gird itself for a period of relative austerity compared with the gusher of defense spending that has sustained it over the past eight years. In particular, Gates suggested that the Army will have a tough time justifying its spending on heavy armor formations - which have been the core of its force for decades - to lawmakers and the White House.
"In the competition for tight defense dollars, the Army ... must confront the reality that the most plausible, high-end scenarios for the U.S. military are primarily naval and air engagements - whether in Asia, the Persian Gulf or elsewhere," he said.
The defense chief predicted that Army and Marine forces would increasingly be asked to focus more on short-duration counterterrorism strikes and disaster relief. As he has for the past several years, Gates called on the Army to devote more of its best personnel to training and equipping foreign militaries.
Gates said he was not advocating the Army should become a counter-insurgency or nation-building force. "By no means am I suggesting that the Army will, or should, turn into a Victorian nation-building constabulary - designed to chase guerrillas, build schools or sip tea."
Despite a big push in recent years to build the Iraqi and Afghan militaries, the U.S. Army has traditionally treated the training and equipping of foreign armies as a career backwater, and Gates's efforts to raise the importance of the mission within the U.S. military have met with mixed results.
"How do we institutionalize security force assistance into the Army's regular force structure, and make the related experience and skill set a career-enhancing pursuit? Gates asked, repeating a question he first put to the Army in 2008.
Much of Gates's speech to the West Point cadets focused on his concerns that officers who have been given wide latitude to take chances and the heavy responsibility of leading their troops in combat would grow disillusioned with the risk-averse nature of military bureaucracy and leave the service.
"Men and women in the prime of their professional lives, who may have been responsible for the lives of scores or hundreds of troops, or millions of dollars in assistance, or engaging or reconciling warring tribes, may find themselves in a cube all day re-formatting PowerPoint slides," Gates told the West Point cadets. "The consequences of this terrify me."
(Wally: Or, what happened after Viet Nam)
To head off this malaise Gates urged the cadets to take career risks, taking assignments that in the past might have been seen by their peers as career dead-ends. "I would encourage you to become a master of other languages and cultures, a priority of mine since taking this post," he said.
The huge growth in the Army bureaucracy over the past decade has also created an almost insatiable demand for mid-level staff officers within the Army. These days almost every major in the Army is guaranteed promotion to lieutenant colonel.
In recent months, Gates has begun an effort to trim back some of this bureaucracy by cutting as many as 100 general and admiral slots. These senior officers typically are given large staffs of young officers. As the demand for young officers decreases, the military will be able to be choosier about whom it promotes and give greater weight to opinions of peers and lower-ranking officers in choosing the next generation of Army leaders.
"It's time that the Army's officer evaluations also consider input from peers and subordinates - the people hardest to fool by posturing, B.S. and flattery," Gates said. "A more merit-based, more individualized approach to officer evaluations could also do much to combat the risk-averse, zero-defect culture that can take over any large, hierarchical organization."
Indeed, Gates envisioned a future in which one of the biggest threats to the Army would come from its own bureaucratic and, at times, rigid culture. "The tendency of any big bureaucracy is to revert to business as usual at the first opportunity - and for the military, that opportunity is, if not peacetime, then the unwinding of sustained combat," he said.
http://www.washingtonpost.com/wp-dyn/content/article/2011/02/25/AR2011022504180.html?hpid=moreheadlines
WEST POINT, N.Y. - Defense Secretary Robert M. Gates, in one of his last addresses to the Army, said Friday that he envisages a future ground force that will be smaller, pack less heavy firepower and will not engage in large-scale counter-insurgency wars like those in Iraq or Afghanistan.
"In my opinion, any future defense secretary who advises the president to again send a big American land army into Asia or into the Middle East or Africa should 'have his head examined,' as General MacArthur so delicately put it," Gates quipped.
(Wally: So much for Rumsfeld- worse than McNamara)
Gates, who is expected to leave his post later this year, predicted a greater role for the Navy and Air Force in the future and warned the Army to gird itself for a period of relative austerity compared with the gusher of defense spending that has sustained it over the past eight years. In particular, Gates suggested that the Army will have a tough time justifying its spending on heavy armor formations - which have been the core of its force for decades - to lawmakers and the White House.
"In the competition for tight defense dollars, the Army ... must confront the reality that the most plausible, high-end scenarios for the U.S. military are primarily naval and air engagements - whether in Asia, the Persian Gulf or elsewhere," he said.
The defense chief predicted that Army and Marine forces would increasingly be asked to focus more on short-duration counterterrorism strikes and disaster relief. As he has for the past several years, Gates called on the Army to devote more of its best personnel to training and equipping foreign militaries.
Gates said he was not advocating the Army should become a counter-insurgency or nation-building force. "By no means am I suggesting that the Army will, or should, turn into a Victorian nation-building constabulary - designed to chase guerrillas, build schools or sip tea."
Despite a big push in recent years to build the Iraqi and Afghan militaries, the U.S. Army has traditionally treated the training and equipping of foreign armies as a career backwater, and Gates's efforts to raise the importance of the mission within the U.S. military have met with mixed results.
"How do we institutionalize security force assistance into the Army's regular force structure, and make the related experience and skill set a career-enhancing pursuit? Gates asked, repeating a question he first put to the Army in 2008.
Much of Gates's speech to the West Point cadets focused on his concerns that officers who have been given wide latitude to take chances and the heavy responsibility of leading their troops in combat would grow disillusioned with the risk-averse nature of military bureaucracy and leave the service.
"Men and women in the prime of their professional lives, who may have been responsible for the lives of scores or hundreds of troops, or millions of dollars in assistance, or engaging or reconciling warring tribes, may find themselves in a cube all day re-formatting PowerPoint slides," Gates told the West Point cadets. "The consequences of this terrify me."
(Wally: Or, what happened after Viet Nam)
To head off this malaise Gates urged the cadets to take career risks, taking assignments that in the past might have been seen by their peers as career dead-ends. "I would encourage you to become a master of other languages and cultures, a priority of mine since taking this post," he said.
The huge growth in the Army bureaucracy over the past decade has also created an almost insatiable demand for mid-level staff officers within the Army. These days almost every major in the Army is guaranteed promotion to lieutenant colonel.
In recent months, Gates has begun an effort to trim back some of this bureaucracy by cutting as many as 100 general and admiral slots. These senior officers typically are given large staffs of young officers. As the demand for young officers decreases, the military will be able to be choosier about whom it promotes and give greater weight to opinions of peers and lower-ranking officers in choosing the next generation of Army leaders.
"It's time that the Army's officer evaluations also consider input from peers and subordinates - the people hardest to fool by posturing, B.S. and flattery," Gates said. "A more merit-based, more individualized approach to officer evaluations could also do much to combat the risk-averse, zero-defect culture that can take over any large, hierarchical organization."
Indeed, Gates envisioned a future in which one of the biggest threats to the Army would come from its own bureaucratic and, at times, rigid culture. "The tendency of any big bureaucracy is to revert to business as usual at the first opportunity - and for the military, that opportunity is, if not peacetime, then the unwinding of sustained combat," he said.
Thursday, February 24, 2011
Census: Near-record level of US counties dying
http://www.stltoday.com/news/article_73d3896a-e8ad-57e5-8078-b24f17b884b4.html
In America's once-thriving coal country, 87-year-old Ed Shepard laments a prosperous era gone by, when shoppers lined the streets and government lent a helping hand. Now, here as in one-fourth of all U.S. counties, West Virginia's graying residents are slowly dying off.
Hit by an aging population and a poor economy, a near-record number of U.S. counties are experiencing more deaths than births in their communities, a phenomenon demographers call "natural decrease."
Years in the making, the problem is spreading amid a prolonged job slump and a push by Republicans in Congress to downsize government and federal spending.
"You're the anchors of our Main Streets," President Barack Obama told small business leaders in Cleveland on Tuesday. "We want your stories _ your successes, your failures, what barriers you're seeing out there to expand. .How can America help you succeed so that you can help America succeed?"
Local businesses in Welch began to shutter after U.S. Steel departed McDowell County, which sits near Interstate 77, once referred to as the "Hillbilly Highway" because it promised a way to jobs in the South. Young adults who manage to attend college _ the high-school dropout rate is 28 percent, compared with about 8 percent nationwide _ can't wait to leave. For some reason, the fish in nearby Elkhorn Creek left too.
"There's no reason for you to come to Welch," says Shepard, wearing a Union 76 cap at a makeshift auto shop he still runs after six decades. "This is nothing but a damn ghost town in a welfare county."
___
In all, roughly 760 of the nation's 3,142 counties are fading away, stretching from industrial areas near Pittsburgh and Cleveland to the vineyards outside San Francisco to the rural areas of east Texas and the Great Plains. Once-booming housing areas, such as retirement communities in Florida, have not been immune.
West Virginia was the first to experience natural decrease statewide over the last decade, with Maine, Pennsylvania and Vermont close to following suit, according to the latest census figures. As a nation, the U.S. population grew by just 9.7 percent since 2000, the lowest decennial rate since the Great Depression.
"Natural decrease is an important but not widely appreciated demographic phenomenon that is reshaping our communities in both rural and urban cores of large metro areas," said Kenneth Johnson, a sociology professor and demographer at the University of New Hampshire's Carsey Institute who analyzed the census numbers.
Johnson said common threads among the dying counties are older whites who are no longer having children, and an exodus of young adults who find little promise in the region and seek jobs elsewhere. The places also have fewer Hispanic immigrants, who on average are younger and tend to have more children than other groups.
"The downturn in the U.S. economy is only exacerbating the problem," said Johnson, whose research paper is being published next month in the journal Rural Sociology. "In some cases, the only thing that can pull an area out is an influx of young Hispanic immigrants or new economic development."
___
The predicament is starkest in places like Welch. In the 1960s, McDowell County ranked tops in the U.S. in coal production. Even as it began to stumble, President John F. Kennedy took notice and pushed federal aid to the region. McDowell residents were the first to get federal food stamps when they were rolled out in the Kennedy administration.
After U.S. Steel sold the last of its mining operations by 2003, folks in southern West Virginia began counting on new highway projects to prop up the long-struggling area.
"One of the promises we're waiting to come is the highway," said Carolyn Falin, an assistant schools superintendent in McDowell County.
From the east, the Coalfields Expressway would bypass the many two-lane, truck-clogged roads zigzagging through the mountainous region. It would link a freeway to the Virginia state line 65 miles to the southwest. So far, only a few miles are open. Design work on most of it hasn't been finished.
From the west, a 95-mile King Coal Highway is also envisioned, with some bridge work and a few miles now under construction.
Shepard, who walks to work from a nearby apartment, watched the county's population plummet 80 percent after U.S. Steel's exit. Even with the recent opening of a federal prison, Shepard bemoans the area's decline, including the end of "20 years of the best fishing you ever saw."
Nowadays, he says, "you can fish but you won't catch any trout. It's like the coal mines. It's all gone."
Recently the U.S. Senate rejected a $900,000 appropriation for a proposed interchange of the King Coal Highway and the Coalfields Expressway near Welch.
___
Dying counties in the U.S. were rare until the 1960s, when the baby boom ended. By 1973, as farming communities declined, roughly 515 counties _ mostly in the Great Plains _ reported natural decrease. The phenomenon then began to show up in industrial regions, such as upstate New York and California. Natural decrease peaked in 2002 at a record 985, or 1 in 3 counties, before increasing births and an influx of Hispanic immigration helped add to county populations during the housing boom.
Following the recent recession, birth rates have dropped to the lowest in a century. Preliminary census numbers for 2007-09 now show that the number of dying counties is back on the upswing. Recent additions include Pittsburgh and its surrounding counties.
James Follain, senior fellow and economist at the Nelson A. Rockefeller Institute of Government at the University of Albany, said a new kind of declining city may be emerging in the wake of the housing bust _ metropolitan areas that rapidly overbuilt earlier in the decade and then suffered massive foreclosures.
He cited as examples Las Vegas, Miami, parts of Arizona, and Stockton, Modesto, Fresno and Riverside in California. Like traditional ghost towns, Follain says, portions of these areas could spiral down from persistent loss of jobs and population and lose their reason for being.
Follain also pointed to a tighter fiscal environment in Washington that will limit help to troubled areas. The Obama administration announced this month it would shrink the government's role in the mortgage system to reduce taxpayer exposure to risk. House Republicans also are pushing federal spending cuts of more than $61 billion, even if it means reducing jobs.
"It's going to be a very slow recovery," Follain said.
___
Not all U.S. areas are declining. Most places with the fastest growth since 2000 were able to retain or attract college graduates and young professionals who came for jobs and later started families. Metro areas with diversified economies such as Austin, Texas, Raleigh, N.C., and Portland, Ore., all saw gains in college graduates; other places seeing gains or reduced losses in young adults, such as Washington, D.C., Boston and San Francisco, have burgeoning biotech industries.
In West Virginia, more than 40 of its 55 counties had natural decrease over the past decade. Yet the state still gained population overall, and averted a loss of a U.S. House of Representatives seat based on the 2010 census.
It wasn't because of a last-minute turnaround. Most of West Virginia's population gains are new residents spilling over into the eastern part of the state from the blossoming Washington-Baltimore metropolitan area. The three counties on the Maryland line _ Morgan, Berkeley and Jefferson _ each had substantial increases.
It's a different story in West Virginia's northern panhandle, along the edge of Pennsylvania near Pittsburgh.
On a recent afternoon, a group of students mingled during a cigarette break at West Virginia Northern Community College in Wheeling and chatted about their futures. "It's not that bad an area," said Demetrius Paige, 19, but there are "not a lot of jobs." He plans to leave within six years.
Kayla Murphy, 19, of Moundsville wants to stay in the state and become a nurse to help children like her brother, who has celiac disease and diabetes. She says moving out is the only real option for career-oriented people. They include her boyfriend, who left for Wisconsin to teach history.
"You have to," Murphy said. "Working at McDonald's isn't cool."
In America's once-thriving coal country, 87-year-old Ed Shepard laments a prosperous era gone by, when shoppers lined the streets and government lent a helping hand. Now, here as in one-fourth of all U.S. counties, West Virginia's graying residents are slowly dying off.
Hit by an aging population and a poor economy, a near-record number of U.S. counties are experiencing more deaths than births in their communities, a phenomenon demographers call "natural decrease."
Years in the making, the problem is spreading amid a prolonged job slump and a push by Republicans in Congress to downsize government and federal spending.
"You're the anchors of our Main Streets," President Barack Obama told small business leaders in Cleveland on Tuesday. "We want your stories _ your successes, your failures, what barriers you're seeing out there to expand. .How can America help you succeed so that you can help America succeed?"
Local businesses in Welch began to shutter after U.S. Steel departed McDowell County, which sits near Interstate 77, once referred to as the "Hillbilly Highway" because it promised a way to jobs in the South. Young adults who manage to attend college _ the high-school dropout rate is 28 percent, compared with about 8 percent nationwide _ can't wait to leave. For some reason, the fish in nearby Elkhorn Creek left too.
"There's no reason for you to come to Welch," says Shepard, wearing a Union 76 cap at a makeshift auto shop he still runs after six decades. "This is nothing but a damn ghost town in a welfare county."
___
In all, roughly 760 of the nation's 3,142 counties are fading away, stretching from industrial areas near Pittsburgh and Cleveland to the vineyards outside San Francisco to the rural areas of east Texas and the Great Plains. Once-booming housing areas, such as retirement communities in Florida, have not been immune.
West Virginia was the first to experience natural decrease statewide over the last decade, with Maine, Pennsylvania and Vermont close to following suit, according to the latest census figures. As a nation, the U.S. population grew by just 9.7 percent since 2000, the lowest decennial rate since the Great Depression.
"Natural decrease is an important but not widely appreciated demographic phenomenon that is reshaping our communities in both rural and urban cores of large metro areas," said Kenneth Johnson, a sociology professor and demographer at the University of New Hampshire's Carsey Institute who analyzed the census numbers.
Johnson said common threads among the dying counties are older whites who are no longer having children, and an exodus of young adults who find little promise in the region and seek jobs elsewhere. The places also have fewer Hispanic immigrants, who on average are younger and tend to have more children than other groups.
"The downturn in the U.S. economy is only exacerbating the problem," said Johnson, whose research paper is being published next month in the journal Rural Sociology. "In some cases, the only thing that can pull an area out is an influx of young Hispanic immigrants or new economic development."
___
The predicament is starkest in places like Welch. In the 1960s, McDowell County ranked tops in the U.S. in coal production. Even as it began to stumble, President John F. Kennedy took notice and pushed federal aid to the region. McDowell residents were the first to get federal food stamps when they were rolled out in the Kennedy administration.
After U.S. Steel sold the last of its mining operations by 2003, folks in southern West Virginia began counting on new highway projects to prop up the long-struggling area.
"One of the promises we're waiting to come is the highway," said Carolyn Falin, an assistant schools superintendent in McDowell County.
From the east, the Coalfields Expressway would bypass the many two-lane, truck-clogged roads zigzagging through the mountainous region. It would link a freeway to the Virginia state line 65 miles to the southwest. So far, only a few miles are open. Design work on most of it hasn't been finished.
From the west, a 95-mile King Coal Highway is also envisioned, with some bridge work and a few miles now under construction.
Shepard, who walks to work from a nearby apartment, watched the county's population plummet 80 percent after U.S. Steel's exit. Even with the recent opening of a federal prison, Shepard bemoans the area's decline, including the end of "20 years of the best fishing you ever saw."
Nowadays, he says, "you can fish but you won't catch any trout. It's like the coal mines. It's all gone."
Recently the U.S. Senate rejected a $900,000 appropriation for a proposed interchange of the King Coal Highway and the Coalfields Expressway near Welch.
___
Dying counties in the U.S. were rare until the 1960s, when the baby boom ended. By 1973, as farming communities declined, roughly 515 counties _ mostly in the Great Plains _ reported natural decrease. The phenomenon then began to show up in industrial regions, such as upstate New York and California. Natural decrease peaked in 2002 at a record 985, or 1 in 3 counties, before increasing births and an influx of Hispanic immigration helped add to county populations during the housing boom.
Following the recent recession, birth rates have dropped to the lowest in a century. Preliminary census numbers for 2007-09 now show that the number of dying counties is back on the upswing. Recent additions include Pittsburgh and its surrounding counties.
James Follain, senior fellow and economist at the Nelson A. Rockefeller Institute of Government at the University of Albany, said a new kind of declining city may be emerging in the wake of the housing bust _ metropolitan areas that rapidly overbuilt earlier in the decade and then suffered massive foreclosures.
He cited as examples Las Vegas, Miami, parts of Arizona, and Stockton, Modesto, Fresno and Riverside in California. Like traditional ghost towns, Follain says, portions of these areas could spiral down from persistent loss of jobs and population and lose their reason for being.
Follain also pointed to a tighter fiscal environment in Washington that will limit help to troubled areas. The Obama administration announced this month it would shrink the government's role in the mortgage system to reduce taxpayer exposure to risk. House Republicans also are pushing federal spending cuts of more than $61 billion, even if it means reducing jobs.
"It's going to be a very slow recovery," Follain said.
___
Not all U.S. areas are declining. Most places with the fastest growth since 2000 were able to retain or attract college graduates and young professionals who came for jobs and later started families. Metro areas with diversified economies such as Austin, Texas, Raleigh, N.C., and Portland, Ore., all saw gains in college graduates; other places seeing gains or reduced losses in young adults, such as Washington, D.C., Boston and San Francisco, have burgeoning biotech industries.
In West Virginia, more than 40 of its 55 counties had natural decrease over the past decade. Yet the state still gained population overall, and averted a loss of a U.S. House of Representatives seat based on the 2010 census.
It wasn't because of a last-minute turnaround. Most of West Virginia's population gains are new residents spilling over into the eastern part of the state from the blossoming Washington-Baltimore metropolitan area. The three counties on the Maryland line _ Morgan, Berkeley and Jefferson _ each had substantial increases.
It's a different story in West Virginia's northern panhandle, along the edge of Pennsylvania near Pittsburgh.
On a recent afternoon, a group of students mingled during a cigarette break at West Virginia Northern Community College in Wheeling and chatted about their futures. "It's not that bad an area," said Demetrius Paige, 19, but there are "not a lot of jobs." He plans to leave within six years.
Kayla Murphy, 19, of Moundsville wants to stay in the state and become a nurse to help children like her brother, who has celiac disease and diabetes. She says moving out is the only real option for career-oriented people. They include her boyfriend, who left for Wisconsin to teach history.
"You have to," Murphy said. "Working at McDonald's isn't cool."
Wednesday, February 16, 2011
Balancing The Budget: The Problem Might Be You
http://www.npr.org/2011/02/16/133783606/balancing-the-budget-the-problem-might-be-you
The federal government's mounting debt is often blamed on a failure of leadership. But the leaders may not be the only ones at fault.
As unhappy as Americans claim to be about the government's red ink, surveys show most voters want more government than they're willing to pay for.
If We Build It, Who Will Pay?
Even as he proposes budget cuts in some areas, President Obama wants to spend more federal money to update and improve the country's overstretched roads and bridges.
Traffic-weary commuters can only honk in support when the president calls for stepped-up investment in infrastructure, as he did in Michigan last week.
"If we want new jobs and businesses here in America, we've got to have the best transportation system. And the best communication network in the world," he said. "It's like that movie Field of Dreams. If we build it, they will come. But we've got to build it."
A survey for the Rockefeller Foundation found overwhelming support for infrastructure investment. Pollster Jay Campbell, who conducted the survey, says that backing cuts across party lines.
"In a time and place when Republicans almost pride themselves on disagreeing with everything that President Obama stands for," Campbell says, "66 percent of Republicans said that they agreed with this approach."
But even the most ardent supporters of highway spending hit the brakes when pollsters started asking if they would be willing to help pay for it.
"Where support did start to drop off — and did so quite dramatically — is when voters themselves are asked to help foot the bill," Campbell says.
Survey respondents rejected the idea of paying for roads with higher gasoline taxes by a better than 2-to-1 margin. Additional toll charges were almost as unpopular.
In other words, if you build it, Americans will come, so long as they don't have to pay for it.
Change But No Change, Please
"The overarching problem is people want everything to change, and they want nothing to change at the same time," Campbell says. "It puts elected leaders in a really tough position."
For years now, elected leaders have dealt with that challenge by indulging Americans' desire for services, without trying to collect. That's one reason we're now staring at a $1.6 trillion deficit.
While congressional Republicans are proposing dramatic cuts in discretionary spending, most Americans are hard-pressed to identify specific parts of the government they are willing to do without. A survey by the Pew Research Center found the only government program that got anything close to a cutting consensus was foreign aid.
"Foreign aid is the least popular aspect of the budget typically. And you see that in this survey as well," says Carroll Doherty of the Pew Research Center. "But even here, you still get less than 50 percent saying, 'Cut it.' It's not overwhelming. Even though that's the largest area on our list."
Foreign aid accounts for about 1 percent of the budget.
Doherty says for the most popular programs, like Medicare and education, only about 1 in 10 people favors cuts.
'Sinking In'
Still, there are some signs the growing deficit is making people more careful about what they wish for. Fewer survey respondents now ask for more government spending in areas like defense and health care than they did just two years ago.
"I think it's a recognition that the government can't spend as it has been," Doherty says. "I think that's sinking in on the public. But taking that next step and really applying the knife to these programs is a more difficult thing."
So when political leaders seem timid about cutting the biggest government programs or asking people to pay more for them, they're simply taking their cues from the people who elected them.
The federal government's mounting debt is often blamed on a failure of leadership. But the leaders may not be the only ones at fault.
As unhappy as Americans claim to be about the government's red ink, surveys show most voters want more government than they're willing to pay for.
If We Build It, Who Will Pay?
Even as he proposes budget cuts in some areas, President Obama wants to spend more federal money to update and improve the country's overstretched roads and bridges.
Traffic-weary commuters can only honk in support when the president calls for stepped-up investment in infrastructure, as he did in Michigan last week.
"If we want new jobs and businesses here in America, we've got to have the best transportation system. And the best communication network in the world," he said. "It's like that movie Field of Dreams. If we build it, they will come. But we've got to build it."
A survey for the Rockefeller Foundation found overwhelming support for infrastructure investment. Pollster Jay Campbell, who conducted the survey, says that backing cuts across party lines.
"In a time and place when Republicans almost pride themselves on disagreeing with everything that President Obama stands for," Campbell says, "66 percent of Republicans said that they agreed with this approach."
But even the most ardent supporters of highway spending hit the brakes when pollsters started asking if they would be willing to help pay for it.
"Where support did start to drop off — and did so quite dramatically — is when voters themselves are asked to help foot the bill," Campbell says.
Survey respondents rejected the idea of paying for roads with higher gasoline taxes by a better than 2-to-1 margin. Additional toll charges were almost as unpopular.
In other words, if you build it, Americans will come, so long as they don't have to pay for it.
Change But No Change, Please
"The overarching problem is people want everything to change, and they want nothing to change at the same time," Campbell says. "It puts elected leaders in a really tough position."
For years now, elected leaders have dealt with that challenge by indulging Americans' desire for services, without trying to collect. That's one reason we're now staring at a $1.6 trillion deficit.
While congressional Republicans are proposing dramatic cuts in discretionary spending, most Americans are hard-pressed to identify specific parts of the government they are willing to do without. A survey by the Pew Research Center found the only government program that got anything close to a cutting consensus was foreign aid.
"Foreign aid is the least popular aspect of the budget typically. And you see that in this survey as well," says Carroll Doherty of the Pew Research Center. "But even here, you still get less than 50 percent saying, 'Cut it.' It's not overwhelming. Even though that's the largest area on our list."
Foreign aid accounts for about 1 percent of the budget.
Doherty says for the most popular programs, like Medicare and education, only about 1 in 10 people favors cuts.
'Sinking In'
Still, there are some signs the growing deficit is making people more careful about what they wish for. Fewer survey respondents now ask for more government spending in areas like defense and health care than they did just two years ago.
"I think it's a recognition that the government can't spend as it has been," Doherty says. "I think that's sinking in on the public. But taking that next step and really applying the knife to these programs is a more difficult thing."
So when political leaders seem timid about cutting the biggest government programs or asking people to pay more for them, they're simply taking their cues from the people who elected them.
How the middle class became the underclass
http://money.cnn.com/2011/02/16/news/economy/middle_class/index.htm?source=cnn_bin&hpt=Sbin
NEW YORK (CNNMoney) -- Are you better off than your parents?
Probably not if you're in the middle class.
Incomes for 90% of Americans have been stuck in neutral, and it's not just because of the Great Recession. Middle-class incomes have been stagnant for at least a generation, while the wealthiest tier has surged ahead at lighting speed.
In 1988, the income of an average American taxpayer was $33,400, adjusted for inflation. Fast forward 20 years, and not much had changed: The average income was still just $33,000 in 2008, according to IRS data.
Meanwhile, the richest 1% of Americans -- those making $380,000 or more -- have seen their incomes grow 33% over the last 20 years, leaving average Americans in the dust.
Experts point to some of the usual suspects -- like technology and globalization -- to explain the widening gap between the haves and have-nots.
But there's more to the story.
A real drag on the middle class
One major pull on the working man was the decline of unions and other labor protections, said Bill Rodgers, a former chief economist for the Labor Department, now a professor at Rutgers University.
Because of deals struck through collective bargaining, union workers have traditionally earned 15% to 20% more than their non-union counterparts, Rodgers said.
But union membership has declined rapidly over the past 30 years. In 1983, union workers made up about 20% of the workforce. In 2010, they represented less than 12%.
"The erosion of collective bargaining is a key factor to explain why low-wage workers and middle income workers have seen their wages not stay up with inflation," Rodgers said.
Without collective bargaining pushing up wages, especially for blue-collar work -- average incomes have stagnated.
International competition is another factor. While globalization has lifted millions out of poverty in developing nations, it hasn't exactly been a win for middle class workers in the U.S.
Factory workers have seen many of their jobs shipped to other countries where labor is cheaper, putting more downward pressure on American wages.
"As we became more connected to China, that poses the question of whether our wages are being set in Beijing," Rodgers said.
Finding it harder to compete with cheaper manufacturing costs abroad, the U.S. has emerged as primarily a services-producing economy. That trend has created a cultural shift in the job skills American employers are looking for.
Whereas 50 years earlier, there were plenty of blue collar opportunities for workers who had only high school diploma, now employers seek "soft skills" that are typically honed in college, Rodgers said.
A boon for the rich
While average folks were losing ground in the economy, the wealthiest were capitalizing on some of those same factors, and driving an even bigger wedge between themselves and the rest of America.
For example, though globalization has been a drag on labor, it's been a major win for corporations who've used new global channels to reduce costs and boost profits. In addition, new markets around the world have created even greater demand for their products.
"With a global economy, people who have extraordinary skills... whether they be in financial services, technology, entertainment or media, have a bigger place to play and be rewarded from," said Alan Johnson, a Wall Street compensation consultant.
As a result, the disparity between the wages for college educated workers versus high school grads has widened significantly since the 1980s.
In 1980, workers with a high school diploma earned about 71% of what college-educated workers made. In 2010, that number fell to 55%.
Another driver of the rich: The stock market.
The S&P 500 has gained more than 1,300% since 1970. While that's helped the American economy grow, the benefits have been disproportionately reaped by the wealthy.
And public policy of the past few decades has only encouraged the trend.
The 1980s was a period of anti-regulation, presided over by President Reagan, who loosened rules governing banks and thrifts.
A major game changer came during the Clinton era, when barriers between commercial and investment banks, enacted during the post-Depression era, were removed.
In 2000, President Bush also weakened the government's oversight of complex securities, allowing financial innovations to take off, creating unprecedented amounts of wealth both for the overall economy, and for those directly involved in the financial sector.
Tax cuts enacted during the Bush administration and extended under Obama were also a major windfall for the nation's richest.
And as then-Federal Reserve chairman Alan Greenspan brought interest rates down to new lows during the decade, the housing market experienced explosive growth.
"We were all drinking the Kool-aid, Greenspan was tending bar, Bernanke and the academic establishment were supplying the liquor," Deutsche Bank managing director Ajay Kapur wrote in a research report in 2009.
But the story didn't end well. Eventually, it all came crashing down, resulting in the worst economic slump since the Great Depression.
With the unemployment rate still excessively high and the real estate market showing few signs of rebounding, the American middle class is still reeling from the effects of the Great Recession.
Meanwhile, as corporate profits come roaring back and the stock market charges ahead, the wealthiest people continue to eclipse their middle-class counterparts.
"I think it's a terrible dilemma, because what we're obviously heading toward is some kind of class warfare," Johnson said.
NEW YORK (CNNMoney) -- Are you better off than your parents?
Probably not if you're in the middle class.
Incomes for 90% of Americans have been stuck in neutral, and it's not just because of the Great Recession. Middle-class incomes have been stagnant for at least a generation, while the wealthiest tier has surged ahead at lighting speed.
In 1988, the income of an average American taxpayer was $33,400, adjusted for inflation. Fast forward 20 years, and not much had changed: The average income was still just $33,000 in 2008, according to IRS data.
Meanwhile, the richest 1% of Americans -- those making $380,000 or more -- have seen their incomes grow 33% over the last 20 years, leaving average Americans in the dust.
Experts point to some of the usual suspects -- like technology and globalization -- to explain the widening gap between the haves and have-nots.
But there's more to the story.
A real drag on the middle class
One major pull on the working man was the decline of unions and other labor protections, said Bill Rodgers, a former chief economist for the Labor Department, now a professor at Rutgers University.
Because of deals struck through collective bargaining, union workers have traditionally earned 15% to 20% more than their non-union counterparts, Rodgers said.
But union membership has declined rapidly over the past 30 years. In 1983, union workers made up about 20% of the workforce. In 2010, they represented less than 12%.
"The erosion of collective bargaining is a key factor to explain why low-wage workers and middle income workers have seen their wages not stay up with inflation," Rodgers said.
Without collective bargaining pushing up wages, especially for blue-collar work -- average incomes have stagnated.
International competition is another factor. While globalization has lifted millions out of poverty in developing nations, it hasn't exactly been a win for middle class workers in the U.S.
Factory workers have seen many of their jobs shipped to other countries where labor is cheaper, putting more downward pressure on American wages.
"As we became more connected to China, that poses the question of whether our wages are being set in Beijing," Rodgers said.
Finding it harder to compete with cheaper manufacturing costs abroad, the U.S. has emerged as primarily a services-producing economy. That trend has created a cultural shift in the job skills American employers are looking for.
Whereas 50 years earlier, there were plenty of blue collar opportunities for workers who had only high school diploma, now employers seek "soft skills" that are typically honed in college, Rodgers said.
A boon for the rich
While average folks were losing ground in the economy, the wealthiest were capitalizing on some of those same factors, and driving an even bigger wedge between themselves and the rest of America.
For example, though globalization has been a drag on labor, it's been a major win for corporations who've used new global channels to reduce costs and boost profits. In addition, new markets around the world have created even greater demand for their products.
"With a global economy, people who have extraordinary skills... whether they be in financial services, technology, entertainment or media, have a bigger place to play and be rewarded from," said Alan Johnson, a Wall Street compensation consultant.
As a result, the disparity between the wages for college educated workers versus high school grads has widened significantly since the 1980s.
In 1980, workers with a high school diploma earned about 71% of what college-educated workers made. In 2010, that number fell to 55%.
Another driver of the rich: The stock market.
The S&P 500 has gained more than 1,300% since 1970. While that's helped the American economy grow, the benefits have been disproportionately reaped by the wealthy.
And public policy of the past few decades has only encouraged the trend.
The 1980s was a period of anti-regulation, presided over by President Reagan, who loosened rules governing banks and thrifts.
A major game changer came during the Clinton era, when barriers between commercial and investment banks, enacted during the post-Depression era, were removed.
In 2000, President Bush also weakened the government's oversight of complex securities, allowing financial innovations to take off, creating unprecedented amounts of wealth both for the overall economy, and for those directly involved in the financial sector.
Tax cuts enacted during the Bush administration and extended under Obama were also a major windfall for the nation's richest.
And as then-Federal Reserve chairman Alan Greenspan brought interest rates down to new lows during the decade, the housing market experienced explosive growth.
"We were all drinking the Kool-aid, Greenspan was tending bar, Bernanke and the academic establishment were supplying the liquor," Deutsche Bank managing director Ajay Kapur wrote in a research report in 2009.
But the story didn't end well. Eventually, it all came crashing down, resulting in the worst economic slump since the Great Depression.
With the unemployment rate still excessively high and the real estate market showing few signs of rebounding, the American middle class is still reeling from the effects of the Great Recession.
Meanwhile, as corporate profits come roaring back and the stock market charges ahead, the wealthiest people continue to eclipse their middle-class counterparts.
"I think it's a terrible dilemma, because what we're obviously heading toward is some kind of class warfare," Johnson said.
Thursday, February 10, 2011
The Germans Buy The New York Stock Exchange
http://www.msnbc.msn.com/id/41492026/ns/business-us_business/
BERLIN — Germany's Deutsche Boerse AG, the company that runs the stock exchange in Europe's largest economy, could soon take over the New York Stock Exchange.
NYSE Euronext Inc., which also operates exchanges in Europe, said Wednesday it is in "advanced discussions" about a possible merger with Deutsche Boerse, owner of the Frankfurt stock exchange.
The new company would have dual headquarters in New York and Frankfurt. The announcement came hours after news of a $2.9 billion merger between the London Stock Exchange and TMX Group Inc., parent company of the Toronto Stock Exchange.
Deutsche Boerse shareholders would hold 59 to 60 percent of the combined company. NYSE Euronext said it expected the two market operators to combine their businesses under a new legal entity incorporated in the Netherlands.
The New York Stock Exchange is already the world's largest stock market. But its parent, the $9.9 billion NYSE Euronext, isn't even the largest exchange company in the U.S. That title belongs to the $20 billion CME Group Inc. CME runs the Chicago Mercantile Exchange, where wheat, corn and pork belly futures are traded, as well as a number of other exchanges.
"The real motivation here is really about competing with the CME Group," said Larry Tabb, founder and CEO of the Tabb Group. Increased competition has made stock trading less profitable. So the answer is to get bigger, he said.
But the thought of a German company taking over the NYSE could run into trouble with Congress, Tabb said. "It's going to get interesting," he said.
The NYSE Group, operator of the New York Stock Exchange, bought Euronext for $10.2 billion in 2007. The combined company handles stock and derivative markets in Amsterdam, Brussels, Lisbon and Paris as well as the NYSE Liffe derivatives market.
Deutsche Boerse, whose predecessor was founded in 1585, operates the stock market in Europe's largest economy. It also runs Europe's largest derivative exchange, the Eurex.
Aite Group analyst Simmy Grewal said more mergers may be on the way. Shares in other exchanges jumped on the news. The Nasdaq OMX Group Inc., the IntercontinentalExchange and CBOE Holdings Inc. all gained more than 4 percent. CME Group rose 1 percent.
Deutsche Boerse AG chief executive Reto Francioni would become the new group's chairman, and NYSE's CEO Duncan Niederauer, based in New York, its CEO.
The new company's executive committee would be drawn equally from the current leadership of both companies.
For Deutsche Boerse, the deal would represent a breakthrough in its aim to strengthen its international profile. Deutsche Boerse had been in merger talks with NYSE Euronext three years ago, but no deal was reached.
In 2006, the company tried to buy Euronext NV in a bid to build a pan-European stock exchange, but it eventually gave up, clearing the way for NYSE to merge with Euronext, which then formed the world's first trans-Atlantic stock exchange.
In 2005, a Deutsche Boerse takeover bid for Britain's London Stock Exchange Group PLC did not succeed.
BERLIN — Germany's Deutsche Boerse AG, the company that runs the stock exchange in Europe's largest economy, could soon take over the New York Stock Exchange.
NYSE Euronext Inc., which also operates exchanges in Europe, said Wednesday it is in "advanced discussions" about a possible merger with Deutsche Boerse, owner of the Frankfurt stock exchange.
The new company would have dual headquarters in New York and Frankfurt. The announcement came hours after news of a $2.9 billion merger between the London Stock Exchange and TMX Group Inc., parent company of the Toronto Stock Exchange.
Deutsche Boerse shareholders would hold 59 to 60 percent of the combined company. NYSE Euronext said it expected the two market operators to combine their businesses under a new legal entity incorporated in the Netherlands.
The New York Stock Exchange is already the world's largest stock market. But its parent, the $9.9 billion NYSE Euronext, isn't even the largest exchange company in the U.S. That title belongs to the $20 billion CME Group Inc. CME runs the Chicago Mercantile Exchange, where wheat, corn and pork belly futures are traded, as well as a number of other exchanges.
"The real motivation here is really about competing with the CME Group," said Larry Tabb, founder and CEO of the Tabb Group. Increased competition has made stock trading less profitable. So the answer is to get bigger, he said.
But the thought of a German company taking over the NYSE could run into trouble with Congress, Tabb said. "It's going to get interesting," he said.
The NYSE Group, operator of the New York Stock Exchange, bought Euronext for $10.2 billion in 2007. The combined company handles stock and derivative markets in Amsterdam, Brussels, Lisbon and Paris as well as the NYSE Liffe derivatives market.
Deutsche Boerse, whose predecessor was founded in 1585, operates the stock market in Europe's largest economy. It also runs Europe's largest derivative exchange, the Eurex.
Aite Group analyst Simmy Grewal said more mergers may be on the way. Shares in other exchanges jumped on the news. The Nasdaq OMX Group Inc., the IntercontinentalExchange and CBOE Holdings Inc. all gained more than 4 percent. CME Group rose 1 percent.
Deutsche Boerse AG chief executive Reto Francioni would become the new group's chairman, and NYSE's CEO Duncan Niederauer, based in New York, its CEO.
The new company's executive committee would be drawn equally from the current leadership of both companies.
For Deutsche Boerse, the deal would represent a breakthrough in its aim to strengthen its international profile. Deutsche Boerse had been in merger talks with NYSE Euronext three years ago, but no deal was reached.
In 2006, the company tried to buy Euronext NV in a bid to build a pan-European stock exchange, but it eventually gave up, clearing the way for NYSE to merge with Euronext, which then formed the world's first trans-Atlantic stock exchange.
In 2005, a Deutsche Boerse takeover bid for Britain's London Stock Exchange Group PLC did not succeed.
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